Correlation Between JPMorgan Chase and Descartes Systems

Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Descartes Systems at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining JPMorgan Chase and Descartes Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JPMorgan Chase Co and Descartes Systems Group, you can compare the effects of market volatilities on JPMorgan Chase and Descartes Systems and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in JPMorgan Chase with a short position of Descartes Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Descartes Systems.

Diversification Opportunities for JPMorgan Chase and Descartes Systems

0.96

Correlation Coefficient

JPMorgan Chase  Descartes Systems

Almost no diversification

The 3 months correlation between JPMorgan and Descartes is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Descartes Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Descartes Systems and JPMorgan Chase is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on JPMorgan Chase Co are associated (or correlated) with Descartes Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Descartes Systems has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Descartes Systems go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Descartes Systems

Assuming the 90 days trading horizon JPMorgan Chase is expected to generate 1.31 times less return on investment than Descartes Systems. In addition to that, JPMorgan Chase is 1.31 times more volatile than Descartes Systems Group. It trades about 0.16 of its total potential returns per unit of risk. Descartes Systems Group is currently generating about 0.27 per unit of volatility. If you would invest  13,337  in Descartes Systems Group on September 13, 2024 and sell it today you would earn a total of  3,635  from holding Descartes Systems Group or generate 27.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  Descartes Systems Group

JPMorgan Chase

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

Descartes Systems

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Descartes Systems Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Descartes Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and Descartes Systems

The main advantage of trading using opposite JPMorgan Chase and Descartes Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Descartes Systems can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Descartes Systems will offset losses from the drop in Descartes Systems' long position.

The idea behind JPMorgan Chase Co and Descartes Systems Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.